Gold, Platinum and Silver

Geoff Cook - CFP, CHAIP

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Throughout history, gold has represented wealth and power.  The value of gold has withstood the test of time and today remains (increasingly) an essential part of the foreign exchange reserves of almost every nation. It is interesting to note that the world’s central banks still hold approximately 60% of the world’s above ground bullion.  Major banks and brokerage firms trade gold, silver and platinum at their currency desks, and not their commodity desks. 

 

 

 

“Is gold a commodity, a currency or a store of value?  Though the correct answer is all three, it is primarily a currency and a store of value and is a hedge against paper money and inflation:  as a currency and a store of value, gold has stood the test of many centuries.  As a commodity, gold has little intrinsic worth because of limited industrial use.”

 “I believe the dollar’s status as a store of value has been greatly diminished over the past decade.  It will never regain the outstanding reputation it had 50 years ago.  In light of this, gold bullion will gradually re-emerge as an accepted alternative asset and investment.”   

                                                                                                                                                                                                                        Anthony Fell

Chairman, RBC Capital Markets                                                                                                                                           2006 LBMA Conference in Switzerland   

This 2006 quotation is prescient based on the credit crisis experience of 2008.  As we know countries around the globe have since borrowed and printed massive sums of money in an effort to stimulate their respective economies.  Increasingly concerns over the real value of fiat currency are emerging.  

 We agree with Anthony Fell and additionally view gold as a portfolio insurance strategy.  Gold and other precious metals can play an important role in wealth preservation, and portfolio construction for three fundamental reasons: 

 Gold is viewed as a safe haven in times of financial and geo/political uncertainty.   

 Gold has historically provided a hedge against inflation and currency devaluation (printing of money).  

 Gold and precious metal prices provide useful diversification because values tend to be negatively correlated to the traditional asset classes of stocks, bonds, and cash.   

 Banwell Financial Inc.(BFI) is the only Registered Investment Dealer to be an

Authorized Gold Bars Dealer for Bullion Management Group Inc. (BMG)

 Gold and precious metals may be owned either in bullion bar form, or by owning a combination of bullion and gold producing equities.  Bullion bars may be delivered to the investor, or stored on an insured and fully allocated basis in the vault of The Bank of Nova Scotia (BNS).   

 BNS is a Schedule 1 Canadian Chartered Bank and is a member of the London Bullion Market Association (LBMA) through its ScotiaMocatta Division

 For investors particularly outside of Canada, BMG BullionBars offer the most secure, cost effective, and convenient method of purchasing and storing investment-grade London Good Delivery Standards (LGDS) gold, silver, and platinum bars.  

"The World Economic Forum has ranked Canada’s banking system the soundest in the world for two consecutive years.  Aon Consulting has additionally ranked Toronto as the world’s “lowest risk” city for business."  

- Toronto Star, 11 26 10 

 Historically only institutions and ultra high net worth individuals were able to purchase gold bullion and utilize acceptable storage facilities.  The BMG process for the purchase and storage of bullion bars replicates what institutions and central bankers have been doing for years.  This process is now available to individual investors through BFI.    

 BFI and BMG are consistent in the belief that outright (deeded) ownership of precious metals is the most reliable method of preserving wealth, and eliminating counterparty risk and the inherent risk of paper based (derivative) gold.

 BMG BullionBars provide investors with London Good Delivery Standards, individual deeded ownership to each bar, and secure storage on a fully allocated and insured basis.  The BNS main branch vault in Toronto, Canada is a LBMA certified vault.  

 BMG does not engage in any form of fractional ownership or bullion leasing. 

 BFI and BMG comply with all regulations as defined by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).  All investors are required to complete a detailed application form and provide verification of identity.  The services of World Check are used to ensure that investment applications have no criminal or terrorist ties.  

 Investment Process For Purchasing Bullion Bars: 

 

1)   Contact us to receive a detailed application form.  This application along with identification is completed and submitted to BMG for approval.  BMG will use the services of World Check to ensure applicants have no criminal or terrorist ties.  

 The account opening documents will be completed at this time. 

2)   When the account is opened, a unique client ID is issued enabling the wire transfer of funds into the Bullion Custodial Services (BCS) Trust Account.  Bullion orders can now be placed online by an authorized financial advisor (two day settlement). 

3)   For each bar purchased an individual deed will be issued on serialized security paper.  This deed is produced by the Canadian Bank Note Company and specifies the refiner, exact weight, purity, and serial number.  All bullion deeds are signed by two officers of BCS.  

Notes: 

  •  BMG BullionBars are numbered and registered in the client’s name and stored on an allocated and insured basis with The Bank of Nova Scotia.  Each month ScotiaMocatta issues a monthly list confirming the bars in storage on behalf of BCS.  
  • Auditors review annually the bar lists against the vault holdings and issued bullion deeds.  Please see ScotiaMocatta letter confirming bar lists.
  • KPMG is BMG/BCS auditor.   
  •  RBC Dexia Investor Services Trust provides administrative and reporting services as well as the daily Net Asset Value calculations. 


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When dealing in financial matters, you are urged to consult an advisor for legal, tax or investment advice. Every effort has been made to present information in a clear, exacting manner. However neither the publisher nor the authors can be held responsible for any losses incurred due to the actions of any individual as the result of this post or any errors or omissions contained herein.

Infinite Financial places mutual fund transactions through Banwell Financial Inc. and Life Insurance transactions through Bridgeforce. To learn more about these relationships - click here

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